Ng Min Hong v Soemarli Lie

• Jurisdiction: British Virgin Islands
• Judge: Ellis JA
• Judgment Date: 28 July 2023
• Judgment citation (vLex): [2023] ECSC J0728-5
• Docket Number: BVIHCMAP2022/0068
• Court: Court of Appeal (British Virgin Islands)

Between:

Ng Min Hong

Appellant/First Defendant

and

Soemarli Lie

Respondent/Claimant

Success Overseas Finance Limited (“SOFL”)

Third Defendant

Before:

The Hon. Mde. Vicki Ann Ellis Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Gerard St. C Farara Justice of Appeal [Ag.]

BVIHCMAP2022/0068

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Commercial Appeal — Interlocutory Appeal — Disclosure — Control of documents — Unless Order — Whether the Judge was wrong to conclude that Mr. Ng had control of the relevant documents for disclosure purposes — Whether the judge's conclusion of control was based on an inference that there was an existing understanding or arrangement for Mr. Ng to have free access to the relevant documents — Whether the Judge wrongly relied on 3 specific aspects put forward by Mr. Lie as justifying the inference of an understanding or arrangement giving Mr. Ng free access to the relevant documents for the purposes of the valuation proceedings — Whether on a proper analysis and having regard to the established legal principles, those 3 aspects could not individually or cumulatively justify the said inference — Whether the Judge failed properly to consider whether there was a currently existing understanding or arrangement for Mr. Ng to have free access to the relevant documents

Mr. Soemarlie Lie (“Mr. Lie”), the respondent, brought a claim against Mr. Ng Min Hong (“Mr. Ng”) for unfair prejudice in respect of the conduct of the affairs of a Territory of the Virgin Islands (“BVI”) company known as Success Overseas Finance Ltd (“SOFL”). SOFL was joined as the third defendant in the proceedings below. The second defendant (“Mr. Siregar”) is no longer a defendant as a result of his shares in SOFL having been acquired by Mr. Ng. The unfair prejudice claim has thus been litigated between Mr. Lie and Mr. Ng only as the respective minority (45.85%) shareholder and majority (54.15%) shareholder of SOFL.

SOFL is a BVI holding company which at all material times held shares in an Indonesian holding company called PT Pancadaya Perkasa (“PT PDP”), which in turn owns or holds a majority shareholding in five other Indonesian subsidiary companies operating in the palm oil industry in Indonesia. These five subsidiaries are respectively known as PT PEU, PT APMR, PT BMML, PT MMMA and PT SANR (together with PT PDP, the “PT PDP Group”).

By 2020, following a number of transactions which Mr. Lie claimed to amount to unfairly prejudicial conduct of the affairs of SOFL by Mr. Ng, the shareholding of PT PDP was essentially owned as follows:

• (i) about 49.6% owned by an Indonesian company known as PT Grahaidea Selarassindo (“PT Grahaidea”), which is itself owned by each of Mr. Ng and his brother in equal shares;

• (ii) about 48.92% owned by another Indonesian company known as PT Karya Purna Wahana (“PT KPW”), which is itself owned by the family of Madam Karlinah, one of the original founder shareholders of the PT PDP Group and the wife of Indonesia's former 4th Vice-President; and

• (iii) about 1.38% owned by PT PDP itself. Thus, Mr. Ng is, by himself, only a minority indirect shareholder of PT PDP through PT Grahaidea.

In a written judgment handed down on 25 ^th October 2021 (the “Main Judgment”) the Judge determined that Mr. Lie's complaints of unfair prejudice were made out and ordered that Mr. Ng should buy out Mr. Lie's shareholding in SOFL on terms to be determined by the Court. The Main Judgment is currently under appeal to the BVI Court of Appeal. Meanwhile, at a hearing of consequential matters on 31 ^st March 2022, the Judge gave further directions, as set out in the 31 ^st March 2022 Order (“the Directions Order”), regarding the basis upon which Mr. Lie's shares in SOFL should be valued. This was aimed at determining the precise timetable of the valuation proceedings.

The Judge rejected Mr. Ng's request for disclosure by 20 ^th June 2022 and ordered that the disclosure date should be 6 ^th June 2022 (as contended for by Mr. Lie) with the result that it was this date that was contained in the Directions Order. The Directions Order inter alia provided for the standard disclosure of 20 categories of documents (“the Documents”) in advance of a 7-day valuation hearing (“the Valuation Proceedings”).

On 7 ^th June 2022, a day after Mr. Ng had failed to produce any disclosure pursuant to the Directions Order, Mr. Ng issued an application for an extension of time (the “Extension Application”) from 6 ^th June 2022 to 5 ^th December 2022. The Extension Application made no reference to any difficulties in obtaining consent from shareholders. In his ex-tempore judgment given on 20 ^th June 2022 (“the June Judgment”) the Judge dismissed Mr. Ng's Extension Application. The learned Judge also adjourned Mr. Lie's cross-application for an unless order with a timetable for adducing further evidence.

On 14 ^th November 2022 at the hearing of the application for the Unless Order the Judge accepted that Mr. Ng had ‘practical control’ of the Documents such that he was in breach of the Directions Order and on 14 ^th November 2022 he ordered that unless Mr. Ng disclose the Documents by 4 pm on 2 ^nd December 2022, he be debarred from defending the Valuation Proceedings.

Dissatisfied with the decision of the learned Judge, Mr. Ng now seeks, by this appeal, to overturn the judgment and Unless Order of 14 ^th November 2022. The Notice of Appeal identifies 3 grounds of appeal and the issues arising therefrom are: i.) Whether the Judge was wrong to conclude that Mr. Ng had control of the relevant documents for disclosure purposes and whether the judge's conclusion of control was based on an inference that there was an existing understanding or arrangement for Mr. Ng to have free access to the relevant documents ii) Whether the Judge wrongly relied on 3 specific aspects put forward by Mr. Lie as justifying the inference of an understanding or arrangement giving Mr. Ng free access to the relevant documents for the purposes of the valuation proceedings and whether on a proper analysis and having regard to the established legal principles, those 3 aspects could not individually or cumulatively justify the said inference – which was in any event negated by the evidence before the Judge; iii) Whether the Judge failed properly to consider whether there was a currently existing understanding or arrangement for Mr. Ng to have free access to the relevant documents and whether the evidence before him supported a finding of an existing understanding or arrangement for free access.

Held: dismissing the appeal, affirming the judgment and order of the court below and awarding costs to the Respondents to be assessed, if not agreed by the parties within 21 days of this judgment that:

• 1. The aim of disclosure in civil litigation is to ensure that all the parties to a civil claim are aware of all the documents that have a bearing on the claim. The duty of disclosure in litigation arises under Part 28 of the Civil Procedure Rules 2000 (“CPR”) which prescribes the appropriate basis for the disclosure of documents. The key factors which must be borne in mind by a judge contemplating an order for disclosure are “relevance” and “control”. A document is liable to be disclosed if it is directly relevant to the issues that would arise for determination at trial and it arises if the party with control of the document intends to rely on it or if it tends to adversely affect that party's case; or if it tends to support another party's case. In this appeal, the question of relevance is not in issue. Instead, the issue of “control” is the gravamen of this appeal and the starting point must be CPR Part 28.2.

  Rule 28.2 of the Civil Procedure Rules 2000 applied.

• 2. In determining whether a “control arrangement” exists, a court is required to undertake a careful analysis of the practical evidence for the existence of an arrangement. It is not sufficient for a litigant, parent company or its subsidiary to merely assert that no arrangement exists or existed. A court must undertake a careful analysis of the practical arrangements in order to ascertain whether documents are within the control of the disclosing party. It is equally important that the court undertake a careful analysis of the practical evidence advanced to refute the contention of practical control. In determining whether documents held by one person are under the practical control of another (where there is no enforceable right of access) the relationship between the parties is irrelevant. It does not depend on there being control over the holder of the documents in some looser sense, such as a parent and subsidiary relationship, what is relevant is whether there is an arrangement or understanding that the holder of the document will have made the relevant documents available for disclosure and inspection.

  Ikana Holdings S. De R. L et al v Putney Capital Management Ltd. BVIHCMAP2021/0027 (delivered 24th January 2022, unreported) followed; Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2008] EWHC 56 (Pat) considered; Lonrho Ltd v Shell Petroleum Co Ltd (No. 1) [1980] 1 WLR 627 considered; Ardila Investments v ENRC [2015] EWHC 3761 (Comm) applied; Pipia v BGEO Group Ltd (formerly known as BGEO Group Plc) [2020] EWHC 402 (Comm) applied; Various Airfinance Leasing Companies and others v Saudi Arabian Airlines Corporation [2022] 1 WLR 1027 applied; Berkeley Square Holdings Limited v Lancer Property Asset Management Ltd & Others [2021] EWCA Civ 551.

• 3. Where a litigant fails to comply with an order for disclosure and advances that he/she did not have the requisite control over the relevant documents, which were held by a third party (who objects or does not consent to disclose the same), and should not therefore be required to give disclosure of those documents, the court is entitled to undertake a careful...